Cost of Pa. turnpike 'pay-to-play' - about $45M

Southbound traffic on the N.E. Extension. An officer at the firm is charged with giving gifts to turnpike officials for deals.
Southbound traffic on the N.E. Extension. An officer at the firm is charged with giving gifts to turnpike officials for deals. (TOM GRALISH / Staff)
Posted: April 03, 2014

How much does "pay-to-play" contracting cost the public?

About $45 million, in one episode at the Pennsylvania Turnpike Commission, according to a recent analysis of a contract for computer software.

The analysis concluded that the turnpike commission paid far too much and received far too little when it bought a software system from Ciber Inc., of Greenwood Village, Colo., whose former vice president has been charged by state prosecutors with giving gifts to turnpike officials to win contracts.

The report said the turnpike commission paid about five times more than it should have - for a faulty system.

"The $58.3 million paid to Ciber for implementing . . . software for a small organization like PTC based on the scope of functionality delivered is extremely high when compared with similar implementations . . . ," according to an analysis conducted for the turnpike commission by Phoenix Business Consulting, of Haltom City, Texas, and obtained by The Inquirer.

The cost should have been $10 million to $15 million, the analysis concluded.

And the system "was poorly designed and poorly implemented," the report said.

In 2004, the Turnpike Commission hired Ciber to produce a feasibility study for a new computer system. In 2005, the turnpike requested proposals to implement the system recommended by the study.

Ciber, one of five companies to bid on the work, was awarded a $3.5 million contract. For a second phase of the project, which was not competitively bid, Ciber was paid an additional $58.3 million, according to a grand jury investigation last year.

"It is highly unusual for a public sector organization to select the firm that develops an RFP . . . as the implementation firm, since it raises the possibility of an unfair advantage," said the Phoenix report, which was issued last month. RFP stands for "request for proposal."

The former Ciber official who was involved with the turnpike commission contract, Dennis Miller, of Harrisburg, faces criminal charges of bid-rigging, conspiracy, and theft. Trial is set for August.

The charges grew out of a March 2013 grand jury presentment against Miller and seven other former state and turnpike officials and contractors.

Miller's lawyer, Mark B. Sheppard, of Philadelphia, said Ciber competitively bid for the software contract, that its bid was examined by a turnpike review committee and determined to be the best.

And the work was done as the turnpike commission requested, Sheppard said.

"The turnpike received exactly what it asked for," Sheppard said Tuesday. "It was signed off on by someone at the turnpike that it was done to the satisfaction of the turnpike.

"I don't think anybody did anything wrong," Sheppard said. "This is an investigation looking for a crime."

Ciber spokeswoman Elizabeth Loeff said the Ciber contract "was timely and properly performed. The system was accepted and approved by the client."

She said Ciber could not comment on the Phoenix report "because we have not seen it, and we were not contacted during its creation or after its completion."

The 85-page grand jury report last year depicted a pervasive culture of money, political favoritism, and influence-peddling at the turnpike commission.

The grand jury said top turnpike officials solicited contractors for campaign contributions to favored politicians, including then-Gov. Ed Rendell, and took gifts of international travel, sports events, and lavish meals.

In return, the contributors' companies received multimillion-dollar contracts, even when other bidders were less expensive and more qualified, the grand jury said.

Miller is accused of donating to Democratic politicians allied with his co-defendants, former turnpike chief executive Joseph Brimmeier and chief operating officer George Hatalowich, as well as giving gifts to Hatalowich and former turnpike board chairman Mitchell Rubin.

The analysis of the Ciber contract was requested by the turnpike's chief information officer "to identify weakness or deficiencies" in the computer system, "so they could be addressed," turnpike commission spokesman William Capone said Tuesday.

Capone said the turnpike commission filed suit against Ciber in August 2012 in Dauphin Court of Common Pleas, seeking repayment of some of the money spent on the computer system.

Ciber spokeswoman Loeff said the legal action was just a "writ of summons" that contained no factual or legal allegations.


pnussbaum@phillynews.com

215-854-4587

@nussbaumpaul

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